Schwarzenegger Argues for Swift Action on California Budget

In a speech to a joint legislative session Tuesday, Gov. Arnold Schwarzenegger (R) urged the Legislature to act expeditiously to address the state's projected $24.3 billion budget deficit and stumped for his revised budget proposal that would eliminate Healthy Families and other programs and cut state spending, MediaNews/Oakland Tribune reports.

Healthy Families is California's Children's Health Insurance Program (Harmon, MediaNews/Oakland Tribune, 6/2).

Schwarzenegger also has proposed:

• Reducing state spending on Medi-Cal by $750 million (California Healthline, 5/15).
• Cutting state funding by $550 million to counties for some health and social services;
• Reducing state spending on the In-Home Supportive Services program by $230.8 million by restricting eligibility to Californians with the most severe disabilities;
• Cutting state spending by $117 million by eliminating the Adult Day Health Care Program (California Healthline, 6/1); and
• Cutting $55.5 million from state spending on the AIDS Drug Assistance Program and other state Office of AIDS initiatives (California Healthline, 5/27).

In the speech, Schwarzenegger said, "California's day of reckoning is here," adding, "Our wallet is empty.  Our bank is closed.  Our credit is dried up."

The governor also returned to his proposal to consolidate and eliminate state boards and commissions, including the Integrated Waste Management Board.

He said, "I will not cut a dollar from education, a dollar from health care, a dollar from public safety, or a dollar from state parks without first cutting the Waste Management Board" (Yi, San Francisco Chronicle, 6/3).

Staring Down June 15

Controller John Chiang (D) has said that a budget deal needs to be finalized by June 15 to provide sufficient time for him to secure short-term loans to fund state operations in the upcoming fiscal year.

Chiang said the state would not have sufficient cash to make all payments by July 29 without the loans (Rothfeld/Goldmacher, Los Angeles Times, 6/3).

California seeks such loans most summers because it makes most of its payments from July to December and collects most of its revenue in the second half of the year (Woo, Wall Street Journal, 6/2).

Legislators Respond

Democratic legislative leaders said they would seek to reduce state spending by the same amount that the governor proposed through more targeted cuts.

Assembly Speaker Karen Bass (D-Los Angeles) said, "The notion we disagree with is to eliminate the safety net for almost everyone" (Herdt, Ventura County Star, 6/2).

Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said legislators "must continue to find a way to invest in health care for children" and other priorities (MediaNews/Oakland Tribune, 6/2).

Steinberg said lawmakers are considering a proposal that would shift responsibility for providing some health care services to local governments.  He said the state would provide funding for the programs but it would fall to cities and counties to control costs or provide additional revenue (Los Angeles Times, 6/3).

Bass and Steinberg said Democrats are prepared to approve $15 billion in cuts quickly.  They did not say how they would cover the rest of the $24.3 billion budget deficit, but the Sacramento Bee reports that the lawmakers indicated they would push for new revenue.

Assembly Minority leader Sam Blakeslee (R-San Luis Obispo) and Senate Minority Leader Dennis Hollingsworth (R-Murietta) said they oppose tax increases or additional borrowing (Yamamura, Sacramento Bee, 6/3). 

Blakeslee said using a piecemeal approach to balance the budget could jeopardize California's ability to secure short-term loans (Los Angeles Times, 6/3).